UN Yes!—Bretton Woods No!

One World—One Governance System

IFG New York/United Nations Summit Teach-In, September 5, 2000

Presentation by David C. Korten

The United Nations was founded in 1945 with a mandate to secure a long standing human dream of peace, justice, and prosperity for all people. The UN's founders chose to open the UN charter with the prophetic words, "We the peoples of the United Nations...." Perhaps they anticipated that where governments might fail, one day the world's people would join in unity, as we are joined in unity here to day, to carry forward this dream.

Everywhere, we the peoples are rising to the challenge. A globalizing civil society, rudely awakened by the excesses of corporate tyranny, is unifying around the vision of the UN's founders -- a democratic world of peace, justice, and prosperity for all.

In the protest actions of Seattle '99 some 70,000 people from all over the planet faced the rubber bullets, tear gas, and pepper spray of America's police state to protest the violence and injustice of the world that is and to celebrate the peace, justice and prosperity for all of the world that can be. As many as a million others participated in simultaneous demonstrations in cities elsewhere as the global movement for democracy announced itself to the world. Millions more have participated in protests against corporate globalization--both before and since--in India, France, Thailand, England, Bolivia, Switzerland, Brazil and many others.

The global movement for democracy grows out of the national democracy movements that played a critical role in the breakup of the Soviet empire, the fall of apartheid in South Africa and the other great progressive social movements of our time, including the labor, civil rights, environmental, peace, women's, and gay rights movements. Together we have learned that in an interdependent world, until peace, justice, and prosperity are secured for all people, we are all at risk.

Our focus this evening is on the institutions that govern the global economy. Currently these governance functions are divided at the global level between the United Nations system and the Bretton Woods system. The UN system is comprised of the United Nations secretariat; its specialized agencies, such as the World Health Organization, the International Labour Organization, the Food and Agriculture Organization, and the UN's various development assistance funds such as UNDP, UNIFEM, UNFPA, and UNICEF. The Bretton Woods system is comprised of The World Bank, the IMF, and the World Trade Organization. The UN system has by far the broader mandate, is more open and democratic, and in its practice has demonstrated a far greater commitment to human, social, and environmental priorities. By contrast, the secretive and undemocratic Bretton Woods institutions have consistently aligned with the interests of money, banks, and global corporations.

The founders of the United Nations intended that responsibility for managing global economic affairs--including the overall supervision and policy direction of the Bretton Woods institutions--would fall under the jurisdiction of the United Nations General Assembly and its Economic and Social Council. At least since 1981, however, the U.S. government has actively undermined the UN's ability to fulfill this mandate. It has instead supported the Bretton Woods institutions in acting as global governments unto themselves, imposing their will on nation states in disregard of both the democratic will of their own people and the terms of UN conventions and treaties.

The reasons are clear. The U.S. government prefers that the World Bank and IMF take their marching orders from the U.S. Department of Treasury, which in turn marches to the tune of Wall Street banks and investment houses. The WTO functions under the guidance of the U.S. Trade Representative's office, which functions as an extension of the U.S. Business Roundtable--a lobbying arm of the largest U.S. based transnational corporations.

We live in one world. Dividing the governance of its affairs between two competing governmental systems--one responsible for labor, health, food, human rights and environmental concerns and the other for trade, investment, and development--has resulted in a grotesque distortion of human priorities. The need for a more holistic approach to addressing human needs is now more evident than in 1945--the need for global cooperation more urgent.

The choice before us is either to expand the power and mandate of the Bretton Woods triumvirate to cover labor, health, food, human rights, and environmental affairs--thus limiting the UN's role to matters of military security, refugees, and emergency relief--or, reaffirm the original mandate of the United Nations and build its capacity to fulfill its intended function.

Judged by their actions the Bretton Woods institutions dream of a world in which all public services are run for profit by private corporations; all goods and services for domestic consumption are imported from abroad and paid for with money borrowed from foreign banks; and all productive assets and natural resources are owned and managed by global corporations producing for export to the generate foreign exchange needed to repay the foreign loans. This economic absurdity is the dream of global financiers and corporations. It most certainly is not the dream of the world's people.

Not only do the Bretton Woods institutions consistently subordinate social and environmental concerns to corporate profits, they aggressively use their power to block or preclude national and local governments from giving preference to public interests over private corporate interests. To further expand their powers and mandate would be rather like giving the fox the keys to the chicken coop. Our goal must be to reclaim from these institutions the political and economic spaces they have colonized so that people may act through their local and national governments to create vibrant economies, cultures, and governing processes responsive to their needs and values.

Corporate rule can be imposed from the top down--from the global to the local. Democracy must be built from the bottom up--from the local to the global. Our need is not for global institutions with the power and the mandate to dictate local behavior. We need global institutions that assure the right and freedom of local people everywhere to fully express their creative capacities toward the creation of a world responsive to their values, their needs and their aspirations.

In the course of human affairs we find from time to time that by their nature certain institutions are so inherently at odds with human freedom and well-being and so far beyond reform that they must be dismantled and replaced with more responsive and accountable institutional forms. As our forebears eliminated the institutions of monarchy in favor of the institutions of democracy, we must now eliminate the institutions of Bretton Woods--the World Bank, the IMF, and the World Trade Organization--in favor of the United Nations.

For all its evident faults and deficiencies, the United Nations--in stark contrast to the Bretton Woods institutions--is sound in concept and mandate. It is relatively open and democratic. Its institutional structures are reformable. Redirecting to the United Nations the public funding now so badly misused by the Bretton Woods institutions would quickly eliminate the UN's financial and human resource deficits.

Perhaps the greatest barrier to building a United Nations with the capacity to fulfill its necessary role is the increasingly successful corporate initiative to co-opt the UN's resources, policies, and even its logo and to preclude any action by the UN to hold corporations accountable to the public interest. The eagerness with which the UN leadership has responded to this intrusion threatens to seriously erode the UN's legitimacy and credibility with the very citizen groups whose support it most needs.

The UN is properly an institution of the world's governments and of all the people they represent. Corporations, by their nature, represent only the short-term financial self-interest of a small and wealthy elite. They have no legitimate place in the deliberations and decision processes of the United Nations--nor of any other public governing body. If the UN is to be effective in the essential role of advancing the reform and democratization of economic relations among and within nations, it must be freed from corporate influence.

We must hold the UN and our own governments accountable for creating an institutional and policy framework for a planetary system of locally rooted, globally cooperative, just, sustainable, and compassionate economies based on the principles of authentic development and responsive to the needs of all. The magnitude of the task is compounded by the need to rebuild a United Nations suffering from decades of neglect, to dismantle the institutions of Bretton Woods and undo the enormous damage they have wrought, and create new institutions with more appropriate mandates and structures within the UN system.

By its every action the World Bank has increased the foreign indebtedness of low income countries. It is time to replace it with aUnited Nations International Insolvency Court to which indebted countries can turn for assistance in freeing themselves from the chains of international debt and IMF conditionality without sacrificing their ability to provide essential public services.

The International Monetary Fund forces countries to give up control over the flow of money and goods across their borders, leading to massive trade imbalances, international indebtedness, exploitation, and financial instability. It is time to replace it with a United Nations International Finance Organization responsible for:

Monitoring national trade and current account balances, and facilitating negotiations toward agreement on corrective action where there are consequential and persistent imbalances between imports and exports.

Coordinating international action to prevent money laundering by international and offshore banks and tax evasion by individuals and corporations using off shore tax havens.

The World Trade Organization regulates national and local governments to prohibit them from regulating transnational corporations, trade, and finance in the public interest. Let us replace it with a United Nations Organization for Corporate Accountability that would facilitate:

International anti-trust actions to break up global concentrations of corporate power, with special attention to banking, media, and agribusiness.

Legal action by those harmed by a corporate subsidiary in one country to collect damages from the parent company based in another country.

The ratification of an enforceable code of conduct covering all corporations with operations in more than one country, including a strict prohibition on corporate political participation.

The WTO has consistently given priority to trade over concerns for labor, health, food safety, food security, and environmental standards. We must be clear that trade is a means, not an end. Responsibility for matters relating to employment, food safety and security, human and environmental health, and other aspects of human and planetary well-being properly rests not with trade lawyers, but with the relevant specialized UN agencies, such as the World Health Organization, the International Labour Office, the Food and Agriculture Organization, and the United Nations Environment Programme. The mandates and capacities of these agencies to deal with trade related issues should be clarified and strengthened--always giving human and natural interests priority over corporate interests.

Though I've focused hereon needed political and institutional reforms at the global level, equally serious reforms are needed at local and national levels. No where is such reform more urgent than here in the United States. Our government has been the chief architect of the destructive policies of the Bretton Woods system and the weakening of the United Nations. Time after time it has acted to undermine democracy and authentic development in Southern countries. It now stands as the chief barrier to the reform of the destructive structures of corporate globalization. Those of us who hold U.S. citizenship have a special obligation to the world to end this travesty through the deep reform of our political system.

The task before us is to create a coherent system of global governance under the auspices of the United Nations--provide the UN with the human and financial resources to fulfill its original mandate, purge it of corporate influence, and introduce the reforms needed to strengthen its function as a democratic governing body.

We have long waited passively, confident that our institutions would fulfill for us our dreams of peace, justice, and prosperity for all people. Now we know the truth. Our institutions have no such magical powers. The creative energies of humanity reside within people--people like us. Our dreams will become reality only through our own commitment and creative effort. If our institutions block our creative expression, we--the peoples of the United Nations--can change them. That is our right. That is our responsibility--to ourselves--to one another--and to the earth that sustains us all.